Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
expand_more
expand_more
format_list_bulleted
Question
Chapter 7.3, Problem 13P
a)
Summary Introduction
To develop: A model that maximizes the profit.
Non-linear programming (NLP):
Non-linear programming (NLP) is used in complex optimization problems where the objectives or constraints or sometimes both are non-linear functions of the decision variables. A model can be termed as non-linear for more than one reason.
b)
Summary Introduction
To identify: If the total capacity is used when the capacity is 4000.
c)
Summary Introduction
To explain: The behavior of the customer.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
I need help with everything, please.
hint: you will need to define one variable for total funds needed; one variable for each for 2 securities.
and five variables for investment in savings at the beginning of each year. The 6th year will be 1.04 times the
5th-year saving variable. Formulate the problem and submit the formulation - no need to solve
1. As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars):
Year Payment
1 190
2 215
3 240
4 285
5 315
6 460
The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at 4% annually) and government securities, at prices and rates currently quoted in The Wall Street…
Consider a buying firm and a supplier negotiating terms for a contract. Suppose the Marginal Benefit to the buying firm of additional contract provisions in a contract (x) to the firm is: MB = 20,000 – 400x. Suppose the Marginal Cost to the buying firm of additional contract provision to the firm is: MC = 100x. What is the optimal number of contract provisions?
Reconsider the previous question. If the maximum value (or price) of the contract that the buying firm is willing to pay for is $3,000, what would you expect the firm to do?
a) Use the spot market
b) Vertically integrate
c) Continue to contract
d) engage in holdup
A company manufactures two products. If it charges price pi for product i, it can sell qi units of product i,where q1 = 60−3p1 +p2 and q2 = 80−2p2 +p1. It costs $5 to produce a unit of product 1 and $12 to produce a unit of product 2. How many units of each product should the company produce, and what prices should it charge, to maximize its profit?
Chapter 7 Solutions
Practical Management Science
Ch. 7.3 - Prob. 1PCh. 7.3 - Prob. 2PCh. 7.3 - Pricing Decisions at Madison The Madison Company...Ch. 7.3 - Prob. 4PCh. 7.3 - Prob. 5PCh. 7.3 - Prob. 6PCh. 7.3 - Prob. 7PCh. 7.3 - Prob. 8PCh. 7.3 - Prob. 9PCh. 7.3 - Prob. 10P
Ch. 7.3 - Prob. 11PCh. 7.3 - Prob. 12PCh. 7.3 - Prob. 13PCh. 7.3 - PRICING SUITS AT SULLIVANS Sullivans is a retailer...Ch. 7.3 - Prob. 15PCh. 7.4 - Prob. 16PCh. 7.4 - Prob. 17PCh. 7.4 - Prob. 18PCh. 7.4 - Prob. 19PCh. 7.4 - Prob. 20PCh. 7.4 - Prob. 21PCh. 7.4 - Prob. 22PCh. 7.4 - Prob. 23PCh. 7.5 - Prob. 24PCh. 7.5 - Prob. 25PCh. 7.5 - Prob. 26PCh. 7.5 - Prob. 27PCh. 7.6 - Prob. 28PCh. 7.6 - Prob. 29PCh. 7.6 - Prob. 30PCh. 7.6 - Prob. 31PCh. 7.6 - Prob. 32PCh. 7.6 - Prob. 33PCh. 7.6 - The method for rating teams in Example 7.8 is...Ch. 7.7 - Prob. 35PCh. 7.7 - Prob. 36PCh. 7.7 - Prob. 37PCh. 7.7 - The stocks in Example 7.9 are all positively...Ch. 7.7 - Prob. 39PCh. 7.7 - Prob. 40PCh. 7.7 - Prob. 41PCh. 7.7 - Prob. 42PCh. 7.8 - Given the data in the file Stock Beta.xlsx,...Ch. 7.8 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Another way to derive a demand function is to...Ch. 7 - Prob. 48PCh. 7 - If a monopolist produces q units, she can charge...Ch. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - A beer company has divided Bloomington into two...Ch. 7 - Prob. 58PCh. 7 - Prob. 59PCh. 7 - Prob. 60PCh. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - You have 50,000 to invest in three stocks. Let Ri...Ch. 7 - Prob. 65PCh. 7 - Prob. 66PCh. 7 - Prob. 67PCh. 7 - Prob. 68PCh. 7 - Prob. 69PCh. 7 - Prob. 70PCh. 7 - Based on Grossman and Hart (1983). A salesperson...Ch. 7 - Prob. 73PCh. 7 - Prob. 74PCh. 7 - Prob. 75PCh. 7 - Prob. 76PCh. 7 - Prob. 77PCh. 7 - Prob. 78PCh. 7 - Prob. 79PCh. 7 - Prob. 80PCh. 7 - Prob. 81PCh. 7 - Prob. 82PCh. 7 - Prob. 83PCh. 7 - Prob. 84PCh. 7 - Prob. 85PCh. 7 - Prob. 86PCh. 7 - Prob. 1.1CCh. 7 - Prob. 1.2CCh. 7 - Prob. 1.3CCh. 7 - Prob. 1.4C
Knowledge Booster
Similar questions
- OUTPUT AND PRICES IN QUEENTUCKY, ARIZONA This Year’s Output This Year’s Price 800 pairs of Converse $10 per pair 2,000 gallons of Dr. Pepper $2 per gallon 200 pairs of Vans $15 per pair 5,000 lbs. of wheat $5 per pound Queentucky produces 4 final goods: Converse, Dr. Pepper, Vans and wheat. (b) Assume that in Queentucky the GDP deflator/CPI index is 100 in the base year and 125 this year. Calculate the following: (i.) The inflation rate, expressed as a percentage, between the base year and this year. 40% (ii.) This year’s real GDP 32,000 (c) A worker is negotiating a raise with her employer. Based on the inflation rate you calculated in (b)(i), if the employee is given a cost-of-living-adjustment (COLA) of 10% to her salary, what will happen to her real wage? Explain. Answer question C?arrow_forwardABC Co. produces a product in the United Kingdom at a cost of £0.55 per unit which it then sells in France for €1.25 per unit. If in the currency markets, 1 U.S. dollar = £0.6373 and 1 U.S. dollar = €1.0279, how much profit is realized by ABC Co. on each unit of product sold? A. $0.7857 B. $0.3531 C. $0.2571 D. $0.1095arrow_forwardConsider a consumer that lives only for two periods. He works in period 1 (and gets income Y1) and moves up the corporate ladder in period 2 (and gets income Y1 < Y2). This consumer has the usual preferences over time: u(C1) + βu(C2) Assume once again that a consumer cannot borrow, but can borrow and immediately sell some MacGuffins, and in the next period, the consumer must buy back the MacGuffins to return to the lender. Assume that MacGuffin t r a d e s a t P1 > 0 in the first period and is expected to trade at P ̃2 in the second period. Write down the new budget constraint. Would a consumer borrow a MacGuffin? What is the condition on the P ̃2? Is P ̃2 a fair price of a MacGuffin? Could the consumer be better off with a MacGuffin?arrow_forward
- 4. (Arbitrage) A supplier is selling hammers in two cities, Pleasantville and Happy Valley. It costs him$5.00 per hammer delivered in each city. Let p1 be the price of hammers in Pleasantville and p2 be theprice of hammers in Happy Valley. The price-response curves in each city are:Pleasantville: d1(p1) = 10,000 - 800p1Happy Valley: d2(p2) = 8,000 - 500p2a.) Assuming the supplier can charge any prices he likes, what prices should he charge forhammers in Pleasantville and Happy Valley to maximize total contribution? What are thecorresponding demands and total contributions?b.) An enterprising arbitrageur discovers a way to transport hammers from Pleasantville toHappy Valley for $0.50 each. He begins buying hammers in Pleasantville and shipping themto Happy Valley to sell. Assuming the supplier does not change his prices from those givenin part a, what will be the optimal price for the arbitrageur to sell hammers in Happy Valley?How many will he sell? What will his total contribution be?…arrow_forwardSuppose you currently have a portfolio of three stocks, A, B, and C. You own 500 shares of A, 300 of B, and 1000 of C. The current share prices are 42.76, 81.33, and, 58.22, respectively. You plan to hold this portfolio for at least a year. During the coming year, economists have predicted that the national economy will be awful, stable, or great with probabilities 0.2, 0.5, and 0.3. Given the state of the economy, the returns (one-year percentage changes) of the three stocks are independent and normally distributed. However, the means and standard deviations of these returns depend on the state of the economy, as indicated in the file P11_23.xlsx. a. Use @RISK to simulate the value of the portfolio and the portfolio return in the next year. How likely is it that you will have a negative return? How likely is it that you will have a return of at least 25%? b. Suppose you had a crystal ball where you could predict the state of the economy with certainty. The stock returns would still be uncertain, but you would know whether your means and standard deviations come from row 6, 7, or 8 of the P11_23.xlsx file. If you learn, with certainty, that the economy is going to be great in the next year, run the appropriate simulation to answer the same questions as in part a. Repeat this if you learn that the economy is going to be awful. How do these results compare with those in part a?arrow_forwardIn the financial world, there are many types of complex instruments called derivatives that derive their value from the value of an underlying asset. Consider the following simple derivative. A stocks current price is 80 per share. You purchase a derivative whose value to you becomes known a month from now. Specifically, let P be the price of the stock in a month. If P is between 75 and 85, the derivative is worth nothing to you. If P is less than 75, the derivative results in a loss of 100(75-P) dollars to you. (The factor of 100 is because many derivatives involve 100 shares.) If P is greater than 85, the derivative results in a gain of 100(P-85) dollars to you. Assume that the distribution of the change in the stock price from now to a month from now is normally distributed with mean 1 and standard deviation 8. Let EMV be the expected gain/loss from this derivative. It is a weighted average of all the possible losses and gains, weighted by their likelihoods. (Of course, any loss should be expressed as a negative number. For example, a loss of 1500 should be expressed as -1500.) Unfortunately, this is a difficult probability calculation, but EMV can be estimated by an @RISK simulation. Perform this simulation with at least 1000 iterations. What is your best estimate of EMV?arrow_forward
- Finance Applications. Refer to the PI Mortgages Example in the book about a firm that provides mortgages to finance various investments. Now imagine that just like PI Mortgages, a small start up investment company called SmartInc has $1.5 million to invest. There are five categories of loans, each with an associated return and risk ranging from 1 to 10, with 1 being the best, and the risk ratings are similar to what we saw in the PI Mortgage Example. However, the Rates of Return are different in this new market. Just like PIM, if they have any uninvested money left over, the money is placed in a savings account with no risk and a 1.5% rate of return. The information available is placed in the table here: Loan/Investment Return Risk First Mortgages 4% 4 Second Mortgages 8% 6 Personal Loans 8% 9 Commercial Loans 6% 3 Govt. Securities 2% 1 Savings 1.5% 0 The goal for the mortgage team at SmartInc is to allocate the money to the…arrow_forwardWhere a financial institution makes a loan commitment, the borrower, in drawing down on their loan commitment, causes increased cash flow needs by the DI to fund the loan commitments. There are three ways a DI can offset the effect of Asset-side liquidity risk such as drawing down of a loan commitment in all of the following sitiuations Except: a. Reduce excess cash reserves to minimum levels required to meet reserve requirements based on the decision made by management independant of regulatory requirements. b. Reduce balance sheet items such as retain earnings to the meet the minimum required capital levels. c. Taking offsetting measures such as borrowing funds or even purchasing funds on the money market. d. Reducing liquid type assets on their balance sheet such at T-bills by selling them.arrow_forwardThe Camera Shop sells two popular models of digital SLR cameras (Camera A Price: 220, Camera B Price: 310). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model: NA = 196 - 0.5PA + 0.35PB NB = 301 + 0.06PA - 0.6PB Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. Max profit occurs at Camera A price of $ . Max profit occurs at Camera B price of $ . Check My Work (3 remaining)arrow_forward
- The demand equation for the BWS Bluetooth wireless loudspeaker is p = −0.05x + 145 where x is the quantity demanded per month and p is the unit price in dollars. The corresponding supply equation is given by p = 0.025x + 70 where x is the quantity demanded per month and p is the unit price in dollars. Find the equilibrium quantity and the equilibrium price for the BWS Bluetooth wireless loudspeakers. equilibrium quantity units equilibrium price $arrow_forwardA MANUFACTURING FIRM WISHES TO GIVE EACH 80 EMPLOYEES A HOLIDAY BONUS. HOW MUCH IS NEEDED TO INVEST MONTHLY FOR A YEAR AT 12% NOMINAL INTEREST RATE, COMPOUNDED MONTHLY, SO THAT EACH EMPLOYEE WILL RECEIVE A P2,000.00 BONUS? a.P12,600.90 b.P12,615.80 c.P12,300.80 d.P12,608.70arrow_forwardIn the Melitz (2003) model, competition takes the form of free entry of firms to the market at a setup cost and with uncertainty about their marginal cost, implying that in the equilibrium the setup cost to enter the market must equal the firm's _____ profit.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,